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SGB Discount Calculator - Buy Gold at a 30% Discount!

SGB Discount Calculator - Buy Gold at a 30% Discount!

A tool to identify listed SGBs with discounts on their Fair Value

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Amit Wani
ยทMar 12, 2022ยท

2 min read

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Please find the feature update article here

Hello guys, we all know how important asset allocation is when it comes to investing! One of the most proven hedges against Equity has been Gold for the past 50 years. Gold has a very negative correlation most of the time against equity.

In India, it's been well known since the last few years, when RBI has launched the SGB (Sovereign Gold Bonds) scheme, that it is one of the best if not the best investment product for getting exposure in Gold.

RBI have launched many tranches of SGBs since 2015. They have a great tax advantage to it as well if someone has held SGB till maturity, capital gains tax will not be charged. It also comes with a 2.5% simple interest paid semi-annually, along with price appreciation according to the Gold price.

With such benefits, one would want to have their gold portfolio in SGBs and now due to market inefficiencies, you can buy these SGBs from the secondary market (NSE/BSE) for much cheaper than their fair value as of today rather than buying from the primary market.

I have created this tool to calculate this difference (i.e. discount) between the Fair value of that SGB versus its current market price. This idea was inspired by Mr Alok Jain (@WeekendInvestng) of WeekendInvesting.

You can visit here

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As of now, when writing this article, there are some SGBs are available with up to 30% of discount to their Fair value.

More info on different metrics here ๐Ÿ‘‡

Issue Price is the price at which the SGB was launched.

Years to Maturity is time remaining for the maturity of the SGB.

Interest Rate is the simple interest payable to you every year.

Present value of future dividends is calculated using the discount/inflation rate (assumed 6%).

Fair value is calculated based on the present value of future dividends along with the current Gold price in rupee terms.

Discount is calculated based on the difference between Fair Value & Current Market Price.

Yield is the percentage of interest still remaining to be given compared to the current market price.

Prices are updated every hour.

This tool is built using Node JS, Angular, MongoDB and deployed on Northflank as a Docker container. You can look at the source code at https://github.com/mtwn105/sgb-discount-calculator

If you like my app, do support me by using the "Support Me" button, and keep reading my content by subscribing to newsletters. Till next time, peace.

Disc: This is not a piece of investment advice. It is for educational purposes only. Do your due diligence before investing

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